Haven Sites Attract Interest

LISA CHEDEKEL And LYNNE TUOHYCourant Staff Writers

The potential sale of Haven Healthcare's 25 New England nursing homes is drawing interest from some out-of-state private equity firms, with local providers not expected to make a bid for the troubled chain, state and industry officials said.

"The one thing we are fairly sure of is that all 25 homes will be sold. Whether to one entity or several entities remains to be seen," Attorney General Richard Blumenthal said. "The outcome will depend on who bids and what those bids are."

Blumenthal said that a half-dozen corporate entities have expressed an interest in taking over Haven's homes - 15 of them in Connecticut - when the chain goes on the auction block this spring, under a bankruptcy court plan. He said he could not disclose the interested parties because that might discourage potential buyers. But some nursing-home operators and advocates say private equity firms are the most likely suitors, given that locally based chains have little interest in a major expansion.

"There is presently no indication that any Connecticut provider would be interested in taking on 15 homes," said Toni Fatone, executive vice president of the Connecticut Association of Health Care Facilities. "The most likely scenario, given that this is a 25-building real estate entity, is that it will be a big financial entity that will underwrite this sale."

The state's largest nursing-home operators have not expressed interest in acquiring the Haven chain, although the owner of one company said he might consider taking over a few Haven homes if the chain is divvied up.

Lawrence Santilli, president of Athena Health Care Systems, which operates 18 nursing homes in Connecticut, said he would consider taking over "four or five homes" - particularly the Haven homes that do not have union workers - and is waiting to review financial documents on Haven that will be provided to prospective buyers.

Santilli said that for local operators, buying the entire chain would be "a lot to take on. ... I'd like to see [the homes] split up. It makes sense not to have all of them with one company."

Officials of Apple Health Care, another large chain, declined to comment on Haven, but have not expressed an interest to state officials about acquiring the chain.

Haven was a lucrative venture for its CEO, Raymond Termini, who used millions of dollars in assets from the chain to launch a Nashville recording company and make other personal purchases. But in recent years, some of the chain's homes have drawn state scrutiny and sanctions for serious lapses in patient care, and some are in need of major renovations - potential disincentives to buyers.

Nursing-home purchases by private equity firms have become increasingly commonplace, but have stirred controversy. The investment groups often have a complex ownership structure that makes oversight difficult, and some studies suggest that such ownership leads to lower-quality care. Some industry officials dispute that there are drawbacks.

Last year, Genesis HealthCare, which owns nine nursing homes in Connecticut, was bought out by a private equity firm, Formation Capital. Formation is among the firms that may be looking at expanding further in Connecticut, nursing-home advocates said. State lawmakers are proposing legislation that would require more detailed financial reporting by nursing-home owners, and more oversight by the state, to head off the kinds of problems that led to Haven's financial collapse.

Haven Healthcare and its affiliates filed for bankruptcy in November in the wake of a Courant series that detailed the chain's citations for health care deficiencies and spiraling financial problems. Haven's attorneys have outlined a plan that calls for the homes to be offered for sale this spring, with real estate closings tentatively planned for June.

A spokesman for the state Department of Social Services said it would be premature for the agency to speculate about what might happen to the Connecticut homes. If the bankruptcy court authorizes a sale, "we would be reviewing bed need and potential buyers and will make Medicaid rate decisions, balancing resident care, bed need and financial considerations," spokesman David Dearborn said.

State officials said it was too early to discuss whether any Haven homes might close if buyers cannot be found. Dearborn said social services officials have been "looking at bed need, in general," in anticipation of a possible sale.

Fatone said that based on statewide occupancy rates and a recent study of the state's long-term-care needs, "I don't anticipate that [state officials] will see a need to close any of the buildings."

After The Courant reported on Haven's patient-care and financial troubles, the state stepped up its monitoring of Haven homes and halted admissions to one home, in Waterford. Admissions to Waterford remain suspended, and an independent ombudsman, appointed by the bankruptcy trustee, has been monitoring care in all 25 homes.

In a recent report to the bankruptcy court, the ombudsman, Brent Martin, said his team found no serious lapses in care at the Haven facilities during an initial review.

"The baseline assessment of each of the 25 Haven Health Centers disclosed a number of situations that are noteworthy," the report says. "None of the circumstances were believed to place any resident(s) in imminent jeopardy."

The report cites as concerns a "considerable turnover" in management at Haven facilities, as well as a reliance on outside-agency nursing staff in some homes. Temperatures in one home were "uncomfortable and cold," and many facilities were found to be in need of "updating and renovations for both resident safety and comfort," according to the report.

At Haven- Soundview in West Haven, staff members reported a shortage of some supplies, including gloves and diapers, the report says. At Haven's Windham home, rooms were found to be "cluttered with boxes," and litter was observed "on the floor of many resident rooms and the hallways." At other facilities, no significant problems were reported, and staff members said conditions had improved since the state stepped up oversight.